The Natural Wealth of Nations: Harnessing the Market for the Environment

by David Malin Roodman, The Worldwatch Institute, Linda Starke (Editor)

The Natural Wealth of Nations offers concrete solutions to environmental problems by showing how we can turn the tremendous power of market economics away from environmentally destructive activities and toward protecting natural wealth and human health. Looking for some concrete proposals about how to clean up the world's environmental problems? In The Natural Wealth of Nations , David Roodman argues that a critical but often overlooked source of solutions lies in the prosaic world of government subsidies and fiscal policy. If governments overhaul how they raise and spend money, they can use the market to protect the environment without hurting economic growth. For starters, why are the world's governments spending over $700 billion a year to subsidize activities that harm the environment, from logging to mining to driving? Roodman shows how cutting these wasteful subsidies can boost the economy, save tax dollars, and help the environment. But governments can do more. Hidden subsidies are only one of several reasons that consumers get misleading signals from the marketplace about the true environmental costs of their activities. Roodman proposes raising taxes on harmful activities like air pollution while cutting taxes on payrolls and profits. This tax shift would discourage pollution and encourage work and investment. The creation of tradable pollution credits is another way to use the market to include environmental costs. These proposals are not far-fetched, having already been tested in the United States and overseas. In a global survey, Roodman provides examples from Sweden to Spain to Malaysia of the growing number of countries that are successfully using these market-based approaches to clean up their environments.

308 pages, Paperback

First published September 1, 1998

Reviews

[Emilie · Rating 3 out of 5]

I'm not an economist and it showed reading this book. There were times where it was just plain hard to understand. The overall message was clear however - government and politics provide massive obstacles to overcome to see any really change come along. Polluting industries have such a foothold in governments that it's difficult to make any change. Here are some of my favourite quotes from the book:

"start by bringing drivers face-to-face with the full fiscal costs of roads. When driving costs rise, people not only drive shorter distances, they find other ways of getting around, such as taking the train, bicycling, or walking. A pair of rails can carry as many passengers as 16 highway lanes while generating 60 percent less air-polluting nitrogen oxide and almost no carbon monoxide or particulates. And taking cars off crowded roads actually increases the speed of those that remain more than proportionally, so that, in total, vehicles cover more distance in less time."

"When governments spend more on sprawl-inducing infrastructure than they charge for it, when other costs of driving - from traffic jams to air pollution - are also hidden from drivers, and when zoning laws prohibit compact, pedestrian-friendly development, transit cannot compete unaided."

"If governments of especially sprawl-afflicted countries...want motor fuel tax hikes to work well, and work fairly, they need to give people better alternatives to driving. They will need to spend more on mass transit, as much of western Europe already does, and rewrite zoning laws to foster neighbourhoods that more closely mix schools, homes, and shops. Together, these changes can lure people from behind the wheel and onto sidewalks, bike paths, or bus lines."

[Alex Furst · Rating 3 out of 5]

Book #30 of 2022. "The Natural Wealth of Nations" by David Roodman. 3/5 rating.

This book talks about how we can use the market to help the environment.

While a large portion of people who are extremely market-focused seem to discount the environment, David does a good job of laying out the problems with the current status quo and its impact on the environment. We have a large amount of subsidies going to exploitative and harmful companies, while we hamstring progress in new and promising technology.

David talks about resource, cash, and infrastructure subsidies and the places where each of these are failing us. I enjoyed his even-handed discussion on each of these areas. He explains his reasoning why many of these are not succeeding in their intended purpose. Either because they are out-moded, or are hiding the true costs behind some very polluting portions of the economy.

David's big idea is to use the market to make the polluter pay - using cap and trade, or other taxes. This would be able to shift a good deal of the taxes that currently penalize work or ingenuity - think payroll taxes - towards charging for areas that destroy the environment or shift us away from human capital.

While the book had some good ideas, it definitely was NOT the most interesting book (I know, shocker!) Just know that the market, if controlled in the right way, could actually make a larger impact on helping the environment than our current system, all while shifting taxes in ways that would spur ingenuity and penalize waste.